Sri C R S Pillai, Durgapur V. DCIT, Cir-2, Durgapur, Durgapur

ITA 198/KOL/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1240 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 06-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Section: 143(3); 131; 68

Judgement Text

1 ITA NO. 198/KOL/2017 SHRI C. R. S. PILLAI, AY 2013-14 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) BEFORE . . , /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M. BALAGANESH , AM] I.T.A. NO. 198/KOL/2017 ASSESSMENT YEAR: 2013-14 SHRI C. R. S. PILLAI (PAN: ATJPP1456H) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-2, DURGAPUR. APPELLANT RESPONDENT DATE OF HEARING 19.11.2018 DATE OF PRONOUNCEMENT 28.11.2018 FOR THE APPELLANT SHRI SUMIT GHOSH, ADVOCATE FOR THE RESPONDENT SHRI SAURABH KUMAR, ADDL. CIT, SR. DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST TH E ORDER OF THE LD. CIT(A)-DURGAPUR DATED 17.11.2016 FOR AY 2013-14. 2. THE REVISED GROUNDS OF APPEAL OF THE ASSESSEE RE VEALS THAT THE MAIN GRIEVANCE OF THE ASSESSEE IS AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ACTION OF AO TREATING RS.54 LAKHS WHICH THE ASSESSEE CLAIMED TO BE THE UN SECURED LOAN AS UNDISCLOSED CASH CREDIT AND ADDED TO THE INCOME OF THE ASSESSEE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE AN INDIVIDUAL IS A CONTRACTOR AND DURING THE YEAR HAD RECEIVED UNSECURED LOAN OF RS. 54 LAKH S. THE AO NOTED THAT THE ASSESSEE HAD RECEIVED THE AMOUNT FROM SEVEN PERSONS/COMPANIES, S O HE ISSUED NOTICE U/S. 131 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) TO THE CREDITORS TO APPEAR AND PRODUCE DOCUMENTS NECESSARY TO PROVE THEIR IDENTITY , CREDITWORTHINESS AND GENUINENESS OF THE UNSECURED LOAN TRANSACTION WITH THE ASSESSEE. HOWEVER, THE AO NOTES THAT OUT OF SEVEN CREDITORS THE NOTICE COULD BE SERVED ONLY TO SIX PE RSONS EXCEPT THAT OF M/S. METROCITY 2 ITA NO. 198/KOL/2017 SHRI C. R. S. PILLAI, AY 2013-14 SUPPLIER PVT. LTD. WHICH NOTICE HAS BEEN RECEIVED B ACK. ACCORDING TO AO, NONE OF THE CREDITORS APPEARED BEFORE HIM, THEREFORE, HE DEPUTE D AN INSPECTOR TO CONDUCT A FIELD ENQUIRY OF THE CREDITORS [LENDERS OF LOAN]. ACCORDING TO A O, THE ITO FOUND THE ADDRESSES GIVEN FOR THE THREE COMPANIES DO NOT EXIST ON THE GIVEN ADDR ESSES. ACCORDING TO AO, THE DOCUMENTS PROVIDED BY THE ASSESSEE OF THE COMPANIES TO PROVE THE IDENTITY OF THE LOAN CREDITORS LIKE PAN, ITR, ROC DOCUMENTS ETC. ARE THOSE DOCUMENTS WH ICH A TYPICAL ENTRY OPERATOR CREATES WITHOUT DONG ANY ACTUAL BUSINESS (PAPER COMPANIES). SO, HE FORMED AN OPINION THAT THE CREDITORS WHO HAVE GIVEN THE LOANS WERE BOGUS AND, THEREFORE, HE TREATED THE ENTIRE SUM OF RS. 54 LAKHS WHICH THE ASSESSEE CLAIMED AS LOAN AS BOGUS AND ADDED TO THE INCOME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE PREFERRED AN APP EAL BEFORE THE LD. CIT(A) WHEREIN THE ASSESSEE CLAIMED THAT THE AFORESAID AMOUNT OF RS. 5 4 LAKHS WAS RECEIVED FROM SEVEN PERSONS WHICH, INTER ALIA, WERE THREE PRIVATE LIMIT ED COMPANIES AND THE OTHER FOUR WERE INDIVIDUAL CREDITORS. IT WAS EXPLAINED TO THE LD. CIT(A) THAT THE SAID AMOUNT WAS NECESSARY FOR THE ASSESSEE FOR PROVIDING BANK GUARANTEE TO TH E CONTRACTEE AND THAT ALL THE CREDITORS WERE INCOME TAX ASSESSEES. HOWEVER, THE LD. CIT(A) WAS NOT SATISFIED WITH THE DOCUMENTS AND EXPLANATION GIVEN BY THE ASSESSEE AND WAS PLEAS ED TO CONFIRM THE ORDER OF THE AO. AGGRIEVED, THE ASSESSEE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT FROM PAGE 3 OF THE ORDER OF LD. CIT(A) THAT THE ASSESSEE, A CONTRACTOR HAS CLAIMED TO HAVE OBTAINED LOAN FROM SEVEN PERSONS NA MELY, THREE PRIVATE LIMITED COMPANIES AND FOUR INDIVIDUALS. THE DETAILS OF WHICH ARE GIV EN BELOW: SL. NO. PAN NAME LOAN AMOUNT RS. 1. 2. 3. 4. 5. 6. 7. BNZPK8255L AJIPP3902D AJIPP3887D BGBPP6443A AACCI7934G AABCL9088K AAHCM2162R DEEPAK KEDIA RINA PATWARI PARMANAND PATWARI ANKIT PATWARI INTERCITY VENTURES PVT. LTD. LOHARGAL PROPERTIES PVT. LTD. METROCITY SUPPLIER PVT. LTD. 3,00,000 2,00,000 2,00,000 5,00,000 12,00,000 20,00,000 10,00,000 WE NOTE THAT THE ASSESSEE BEING A CONTRACTOR HAD TO FURNISH A BANK GUARANTEE TO THE CONTRACTEE AND FOR THAT HE HAS TAKEN THE LOAN FROM THE AFORESAID CREDITORS. BEFORE US, THE ASSESSEE HAS FILED THE SUPPLEMENTARY PAPER BOOK. F ROM A PERUSAL OF THE SAME, WE NOTE THAT 3 ITA NO. 198/KOL/2017 SHRI C. R. S. PILLAI, AY 2013-14 IN ORDER TO PROVE THE IDENTITY OF THE CREDITORS THE ASSESSEE HAS FILED THE INTIMATION U/S. 143(1) OF THE ACT BY THE INCOME TAX DEPARTMENT TO THE FOLLOWING CREDITORS NAMELY (I) DEEPAK KEDIA, WHO HAD LENT AN AMOUNT OF RS. 3 LACS WHICH IS AVAILABLE AT PAGE 3 OF SUPPLEMENTARY PAPER BOOK (HEREINAFTER SPB ); (II) RINA PATWARI HAS LENT AN AMOUNT OF RS. 2 LACS, (PAG E8 OF SPB); (III) PARMANAND PATWARI, HAS LENT AN AMOUNT OF RS. 2 LACS (PAGE 13 OF SPB); (IV) ANKT PATWARI, HAS LENT AN AMOUNT OF RS. 5 LACS, (P AGE 18 OF SPB). WE ALSO NOTE THAT THE FOLLOWING CREDITORS I.E. PRIV ATE LIMITED COMPANIES SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT WAS FRAMED BY THEI R RESPECTIVE AOS. IN RESPECT OF CREDITORS NAMELY (V) M/S. INTERCITY VENTURES PVT. LTD., LENT AN AMOUNT O F RS. 12 LACS, WHICH IS PLACED AT PAGE 21 OF SPB SECTION 143(3) ORDER DATED 29.01.2016 FOR AY 2013- 14; (VI) M/S. LOHARGAL PROPERTIES PVT. LTD. LENT AN AMOUNT O F RS.20 LACS, WHICH IS PLACED AT PAGE 26 OF SPB SECTION 143(3) ORDER DATED 23.01.2016; (VII) M/S. METROCITY SUPPLIER PVT. LTD., LENT AN AMOUNT O F RS.10 LACS, WHICH IS PLACED AT PAGE 31 OF SPB SECTION 143(3) ORDER DATED 21.03.2016. FROM THE AFORESAID DOCUMENTS I.E. IN RESPECT TO THE INDIVIDUAL CREDITORS (FOUR IN NUMBERS), SEC. 143(1) OF THE ACT INTIMATION FROM THE DEPARTME NT IS AVAILABLE AND IS FOUND PLACED ON RECORD [SUPRA] AND IN THE CASE OF THE THREE PVT. LI MITED COMPANIES WHICH HAS LENT MONEY TO ASSESSEE, WE NOTE THAT THEIR ASSESSMENT HAS BEEN CO MPLETED BY AOS BY SCRUTINY UNDER SECTION 143(3) OF THE ACT FOR THE AY UNDER CONSIDER ATION I.E. AY 2013-14, THEREFORE, THE QUESTION OF IDENTITY OF THE ASSESSEE CANNOT BE DOUB TED. 5. COMING TO THE CREDITWORTHINESS OF THE LENDERS/CR EDITORS IN QUESTION, WE RELY ON THE DECISION OF HONBLE JURISDICTIONAL HIGH IN THE CASE OF DATAWARE PVT. LTD. VS. CIT (ITAT NO.263/2011, GA NO. 2856/2011, DATED 21.09.2011), W HEREIN THE HONBLE HIGH COURT HAS HELD THAT IN CASE THE AO DOUBTS THE CREDITWORTHINES S OF THE CREDITORS THEN HE HAS TO SEEK 4 ITA NO. 198/KOL/2017 SHRI C. R. S. PILLAI, AY 2013-14 INFORMATION ABOUT THE CREDITWORTHINESS FROM THE AO OF THE CREDITORS. THUS, AFTER DOING THE SAID EXERCISE AND GETTING INFORMATION FROM THE AO O F THE CREDITORS THEN ONLY THE AO CAN DRAW ADVERSE INFERENCE AGAINST THE CREDITWORTHINESS OF THOSE CREDITORS. THE HONBLE HIGH COURT HAS HELD AS UNDER: BOTH THE CIT(A) AND THE TRIBUNAL BELOW HAVE IN DE TAILS CONSIDERED THE FACT THAT THE SHARE APPLICATION MONEY WAS PAID BY ACCOUNT PAYEE CHEQUE, THE CREDITOR APPEARED BEFORE AO, DISCLOSED ITS PAN AND ALSO OTHER DETAILS OF THE ACC OUNTS BUT IN SPITE OF THAT THE AO DIDN'T ENQUIRE FURTHER FROM THE AO OF THE CREDITOR BUT INS TEAD, HIMSELF PROCEEDED TO CONSIDER THE P/L A/C OF THE CREDITOR AND OPINED THAT HE HAD SOME DOU BT ABOUT THE GENUINENESS OF SUCH ACCOUNT. IN OUR OPINION, IN SUCH CIRCUMSTANCES, THE AO OF TH E ASSESSEE CAN'T TAKE THE BURDEN OF ASSESSING THE P/L A/C OF THE CREDITOR WHEN ADMITTED LY THE CREDITOR HIMSELF IS AN IT ASSESSEE. AFTER GETTING THE PAN AND GETTING THE INFORMATION T HAT THE CREDITOR IS ASSESSED UNDER THE ACT, THE AO SHOULD ENQUIRE FROM THE AO OF THE CREDITOR A S TO THE GENUINENESS OF THE TRANSACTION AND WHETHER SUCH TRANSACTION HAS BEEN ACCEPTED BY T HE AO OF THE CREDITOR, BUT INSTEAD OF ADOPTING SUCH COURSE, THE AO HIMSELF COULD NOT ENTE R INTO THE RETURN OF THE CREDITOR AND BRAND THE SAME AS UNWORTHY OF CREDENCE. SO LONG IT IS NOT ESTABLISHED THAT THE RETURN SUBMITTED BY THE CREDITOR HAS BEEN REJECTED BY ITS AO, THE AO OF THE ASSESSEE IS BOUND TO ACCEPT THE SAME AS GENUINE WHEN THE IDENTITY OF THE CREDITOR AND THE G ENUINENESS OF THE TRANSACTION THROUGH ACCOUNT PAYEE CHEQUE HAS BEEN ESTABLISHED. WE FIND THAT BOTH THE CIT(A) AND THE TRIBUNAL BELOW FOLLOWED THE WELL ACCEPTED PRINCIPLE WHICH AR E REQUIRED TO BE FOLLOWED IN CONSIDERING THE EFFECT OF SECTION 68 OF THE ACT AND WE THUS FIN D NO REASON TO INTERFERE WITH THE CONCURRENT FINDINGS OF FACT RECORDED BY BOTH THE AUTHORITIES. THE APPEAL IS THUS DEVOID OF ANY SUBSTANCE AND IS SUMMARILY DISMISSED. (EMPHASIS GIVEN BY US) WE NOTE THAT ALL THE LOAN CREDITORS WERE INCOME TAX ASSESSEE AND ALL THE DETAILS WERE FURNISHED BEFORE THE AO, HOWEVER, THE AO HAS NOT BO THERED TO DO ANY SUCH EXERCISE AS NEEDED TO HAVE BEEN DONE AS PRESCRIBED BY THE HONB LE HIGH COURT (SUPRA), SO IN THE ABSENCE OF ANY SUCH EXERCISE BEING CARRIED OUT BY T HE AO BEFORE DRAWING ADVERSE INFERENCE AGAINST THE CREDITWORTHINESS OF THE CREDITORS WE AR E OF THE OPINION THAT THE AO ERRED IN DRAWING ADVERSE INFERENCE AGAINST THE ASSESSEE. 6. FURTHER THE LD. AR DREW OUR ATTENTION TO THE FAC T THAT THOUGH THE AO TREATED THE UNSECURED LOAN AS BOGUS, HOWEVER, HAS ALLOWED THE I NTEREST GIVEN BY THE ASSESSEE TO THESE CREDITORS WHICH COMES TO RS.2,66,600/-. WE NOTE T HAT ON ONE HAND THE AO TREATS THE UNSECURED LOAN AS BOGUS WHEREAS ON THE OTHER HAND, HE TREATS THE INTEREST PAID BY THE ASSESSEE TO THE LENDERS AS GENUINE AND HAS ALLOWED IT WHICH ACTION ALSO EXPOSES THE CONTRADICTION IN THE STAND OF THE AO. WE ALSO NOTE THAT THE TDS TO THE TUNE OF RS.25,830/- WAS DEDUCTED AND THUS THE NET INTEREST COMES TO RS. 2,40,770/-. WE ALSO NOTE THAT THE 5 ITA NO. 198/KOL/2017 SHRI C. R. S. PILLAI, AY 2013-14 ASSESSEE HAS REPAID THE LOAN AMOUNT IN AUGUST, 2013 . WE NOTE THAT THE ASSESSEE HAS REPAID THE LOAN AMOUNT TO LENDERS/CREDITORS BY RTGS FROM I TS ICICI ACCOUNT. WE NOTE THAT THE ASSESSEE HAS RECEIVED THE LOAN THROUGH RTGS (PAPER BOOK PAGES 30 AND 31) AND REPAID IT ALSO THROUGH THE RTGS WHICH IS EVIDENT FROM PAGE 34 OF THE PAPER BOOK. IN SUCH A SCENARIO, THE ASSESSEE HAS DISCHARGED THE ONUS OF P ROVING THE NATURE AND SOURCE OF THE CREDIT ENTRIES IN ITS BOOKS OF ACCOUNT, AND THEREFORE, THE ADDITION U/S. 68 OF THE ACT WAS NOT WARRANTED IN THE FACTS AND CIRCUMSTANCES OF THE CAS E AS DISCUSSED ABOVE. THEREFORE, WE FIND MERIT IN THE APPEAL OF THE ASSESSEE AND THE SAME IS ALLOWED AND WE DIRECT THE DELETION OF ADDITION OF RS. 54 LACS. 7. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH NOVEMBE R, 2018. SD/- SD/- (M. BALAGANESH) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28TH NOVEMBER, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT SHRI C. R. S. PILLAI, SALARPURIA GARDEN IA, BIDHAN NAGAR, DURGAPUR-7133212. 2 RESPONDENT DCIT, CIRCLE-2, DURGAPUR 3 4 5 CIT(A)-DURGAPUR. (SENT THROUGH E-MAIL) CIT , DURGAPUR. DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY